Libya looks to restart oil production, but skirmishes go on

BREGA, Libya — Libya's transitional government plans to resume crude oil and gas production within days, a senior official said Saturday, even as revolutionary fighters were driven back in their attempt to oust holdouts loyal to ex-strongman Moammar Gadhafi.

Libya's crude oil production had ground to a halt during the uprising against Gadhafi, but Ali Tarhouni, the minister for oil and finance in the transitional government, said that it would restart by mid-week, with gas production to follow days later. Tarhouni said that despite months of fighting, the oil infrastructure had survived in good enough shape to assure steady production, though well below the 1.2 to 1.6 million barrels per day — 2 percent of the world demand — it produced before the uprising.

Hostilities continued, however, near the town of Bani Walid, southwest of the capital, Tripoli, where pro-Gadhafi fighters fired rockets toward revolutionary fighters who had advanced to the eastern edge of the town late Friday. By Saturday afternoon, however, they had retreated several miles, and three of their forces had been killed.

Some revolutionary fighters said the pullback was to allow NATO planes to strike pro-Gadhafi targets, while others said that it was to allow their comrades from Bani Walid to move to the front, replacing fighters from other parts of Libya.

"The people from Bani Walid know who the spies are," said Farhad Saleh, the commander of a brigade of fighters from the eastern city of Benghazi.

The fighters said they weren't using rockets and artillery to avoid casualties among the tens of thousands of civilians still inside Bani Walid.

But it appeared that the revolutionaries' enthusiasm might be flagging. In past weeks, recruitment posters have appeared at revolutionary bases around Tripoli, and one commander near Bani Walid said he was waiting for reinforcements before considering another attack on the city.

Still, the new leadership continued to show it was in charge of the whole of Libya, with the head of the transitional government, former Gadhafi justice minister Mustafa Abdul-Jalil, arriving in Tripoli for the first time to rousing cheers from supporters. A quick resumption of oil production would be a more tangible accomplishment for the fledgling government.

Tarhouni — an economics professor at the University of Washington in Seattle who returned in March after nearly 40 years in exile — said crude production would resume at the Al Sarir field in eastern Libya and Mesla in southern Libya by Tuesday or Wednesday. Some days later, oil and gas production will resume at Shirara in southern Libya and Wafa in the southwest, he told reporters while touring Brega, one of the country's biggest petrochemical complexes.

"We will export crude oil from Tobruk and Mellitah" — two of the main ports — "and will be literally functioning in days," he said.

"I can't believe I'm saying that," he added.

Tarhouni said he'd expected at most 60,000 to 80,000 barrels per day from Sarir and Mesla, but that it would be in fact some 160,000 to 180,000 barrels.

"It will be a lot faster than I predicted," he said.

Aides said that exports will not resume for four to six weeks because the storage tanks are mostly empty, and that it would take upwards of a year to resume full-scale production.

The prospect of a full suspension of Libyan crude production sent world oil prices soaring to over $100 a barrel in February, but it wasn't clear if its resumption at modest levels would have the opposite effect, because the oil market may have already discounted Libya's return to the market.